German banks prepare for hard Brexit

BERLIN: German banks are preparing for a so-called "hard Brexit" and the spoils of the U.K.'s departure from the European Union could be shared by other European cities, according to German banking and finance officials.

German central bank executive board member Andreas Dombret said that German banks were planning for a hard Brexit - that the U.K. could leave the EU without any access to the single market or customs union - amid increasing uncertainty over the progress of Brexit negotiations. "Banks are planning on a hard Brexit because they don't know what the outcome is and I think that's a wise thing to do," he said Tuesday, adding that many banks were planning on relocating out of London's financial district.

A key uncertainty for the U.K.'s financial industry is how much access it will have to the EU post Brexit with much uncertainty over "passporting rights" which allow financial firms within the EU to run operations and offer services throughout the European Economic Area (which consists of the EU member states as well as Norway, Iceland and Lichtenstein). The U.K. would like to retain those rights but that is looking unlikely and many European banks could reduce or even close their London offices. Deutsche Bank, Credit Suisse, JPMorgan, UBS and Standard Chartered are among the banks that have all made noises about relocating, outlining plans for European operations post Brexit.

Frankfurt and Dublin are perceived to be the top destinations for London-based financial institutions looking to relocate, as well as Paris with small amounts of information coming from bank officials regarding potential moves. HSBC's CEO Stuart Gulliver confirmed in July that 1,000 staff could move to Paris if there was a "hard Brexit" scenario while Goldman Sachs Chief Executive Lloyd Blankfein teased that the investment bank could move to Germany.

Dombret told CNBC on Tuesday that banks would relocate to cities across Europe, not just Frankfurt.